IFC will part finance the oil refinery expansion project of HPCL Mittal Energy Ltd, a joint venture between PSU oil company HPCL and global steel magnate LN Mittal. The private sector investment arm of the World Bank will come in with loans to support the project, which is expected to absorb $480 million, as per a disclosure by IFC.
HPCL Mittal Energy is into production of petroleum and petrochemical products in India.
The JV firm also has a wholly owned subsidiary, HPCL-Mittal Pipelines Ltd, which has dedicated crude receipt and storage facilities and a pipeline for receipt and transportation of crude oil. It processes lower grade crude to produce higher value petroleum products catering to demand in the northern part of the country.
The fresh investment will go in rebalancing of the Guru Gobind Singh Refinery, a greenfield facility located in Punjab, to increase its capacity from 9 MMTPA to 11.2 MMTPA. The project site is located at the village Phullokhari in the Bathinda district of Punjab, India.
“The project will help increase the throughput of the refinery by about 25 per cent with a relatively smaller investment of approximately 15 per cent of its capital cost,” the corporation said.
Both the JV partners held 49 per cent stake each in the company, while the remaining 2 per cent is held by financial institutions. The firm was rumoured to be planning to raise $407.78 million through an initial public offering by diluting 18 per cent stake in the company by March 2012. This hasn’t materialised yet.
IFC has been an active investor across sectors and through a mix of debt and equity investments in companies directly besides backing other private equity funds investing in the country. Since January this year, it has announced capital commitments in companies such as Jain Irrigation Systems, Educomp Solutions, SRL, Kalki Communication, AU Financiers India, Ujjivan Financial Services and Financial Information Network and Operations Ltd.
(Edited by Prem Udayabhanu)